If Ms. Leila wanted a long-term commitment, and not a one-time-special order, fo

Question

If Ms. Leila wanted a long-term commitment, and not a one-time-special order, for supplying this product, calculate the most likely price to be quoted assuming the markup remains the same?

Zolas' Heaters is approached by Ms. Leila, a new customer, to fulfill a large one -time only special order for a product similar to one offered to regular customers Zolas' Heaters has excess capacity. The following per unit data apply for sales to regular customers Direct materials Direct manufacturing labor Variable manufacturing support Fixed manufacturing support Total manufacturing costs Markup (20% of total manufacturing costs) Estimated selling price $400 120 60 200 780 156 $936 If Ms. Leila wanted a long-term commitment, and not a one -time special order, for supplying this product, calculate the most likely price to be quoted assuming the markup remains same? OA, $580 OB. $780 OC. $936 OD. $520

Explanation / Answer

Answer. $936 Bid Price - For Long Term Commitment = Full Cost + Marup = 780 + 156 = $936

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